DISCUSSION: We’re told that increased size allows specialization, which offers increasing returns to scale.
This allows monopoly, because bigger businesses become more efficient and can outcompete smaller businesses.
We need to show a reason why that won’t happen. Maybe there are problems to scale as well.
___________
- This just shows that there could be multiple local monopolies. Paragraph 3 just said there’s a tendency towards monopoly, not that increasing returns always lead to absolute power for one company.
- Who cares what workers get paid? We care about market control by a company.
- This says nothing about specialization. We have no idea why these businesses dominate their industry. Might have nothing to do with returns to scale.
- This doesn’t prove that returns to scale won’t happen. They just vary across industries.
- CORRECT. This shows that some costs increase as workers specialize. It decreases returns to scale.
Want a free Reading Comp lesson?
Get a free sample of the Reading Comprehension Mastery Seminar. Learn tips for solving RC questions
Leave a Reply